Article

Beating the Big Guys With e-Commerce

by

Elmer G. Wiens

Small business firms and non-profit organizations can seize the opportunities that the Internet offers. The number of Internet users worldwide exceeded 150 million in 1999, and this number is expected to quadruple in a few years. These users are a vast market for organizations offering products or services on web sites. Firms such as Amazon.com and eBay have exploited this market, growing from nothing to giants in less than a decade. Naturally, many small firms want to get in on the action by establishing their own web sites. Other organizations, such as professional associations, want to use web sites to recruit members and create an Internet presence enhancing both their members' reputation and marketability. What is the best way for them to proceed? A boutique might be very competent at acquiring clothes that float off the rack. Each professional member of a not-for-profit association might co-ordinate the activities of hundreds of people. However, designing, constructing, maintaining, and managing an Internet site requires technical expertise and capital these organizations don't necessarily have. Can the government assist by providing information and financing to organizations wanting to enter cyberspace (Canada, Western Economic Diversification)? To compete with the big players on the Internet, small businesses and non-profits, with help from the government, can contract with experienced web-consulting firms to supply the programming and computer skills to ensure delivery of a web site for a reasonable price.

Although primarily an economic phenomenon, electronic commerce forms part of a broader process of social change, characterized by the globalisation of markets, the shift towards an economy based on knowledge and information, and the growing prominence of all forms of technology in everyday life (OECD Economic 143).

The Internet has hastened the globalization of markets. A few decades ago, only the multi-national corporations sold products worldwide. "Today, for a few thousand dollars, anyone can become a merchant and reach millions of consumers world-wide" (OECD Economic 10). Unfortunately, Canadian small businesses are not embracing e-commerce as ardently as American firms. Many domestic firms have neither the investment capital nor the technical knowledge to seize the opportunities the Internet offers. Consequently, Canadian firms lag behind American firms. While the American economy is ten times larger than Canada's, American venture capital investment in the Internet was 36 times larger last year ("E-business Acceleration"). Although the Canadian government is making an effort to encourage e-commerce (Canada, Industry Canada, The Canadian Electronic), some firms paid exorbitant prices for e-commerce sites that are not profitable because they lacked accurate information on the cost of constructing web sites. For example, Edie Hats of Vancouver spent $100 000 building their web site. It is fun to browse (Edie); but, their online revenue was only $15 000 during the web site's first year of operation (Daniels). Evidently, Edie Hats and their web-designer's online-sales projections were much too optimistic. Other firms obtained better returns on their investment. Steed Cycles of North Vancouver hired eBusiness-Aps.com to develop a ten-page e-commerce site for $500 plus $60 per month. They credit $50 000 of their annual sales of one million dollars to their web site (McCullough), demonstrating that the right e-commerce site can earn substantial profits. Still, potential entrants into e-commerce must worry about the financial problems of large Internet firms like Amazon and Buy.com (Linn; "Troubled Buy.com"). These early entrants to global e-commerce are severely curtailing their operations. However, new e-commerce entrants could consider their retrenchment an opportunity to catch up with the big boys.

While the profit motive propelled much of the technological innovation making the Internet accessible to virtually everyone, the Internet has created opportunities for people to express their charitable instincts. In chat rooms, help forums, and collaborative endeavors, people contribute gifts, such as advice, software, and programming tips, to "community friends and anonymous recipients alike, assuming that eventually someone will return the favor" (Tapscott et al. 132). The traditional gift economies, the not-for-profit and volunteer sectors, have used the Internet with mixed effectiveness. Volunteer Vancouver's excellent site, although expensive at $50 000, serves as a place where volunteers and volunteer agencies can meet. Tens of thousands of people search more than 1000 positions with some 450 agencies each year to find a job volunteering (Volunteer Vancouver). Another effective web site is that of the Canadian Administrators of Volunteer Resources (CAVR), a national group that "promotes the professional administration of volunteer resources, certification of membership, continuing education standards and collaboration with provincial, national and international organizations" (CAVR). With members spread all over Canada, they needed a focus, an efficient way to communicate events, issues and meetings, and a means to recruit new members. Their new web site, produced for under $2 500, satisfied these needs, and generated directly a fifteen percent annual increase in the number of members.

Conversely, the Western Association of Directors of Volunteers (WADV) has a web site that has lost its effectiveness. People go to a site for new information. To be effective, a web site must be kept current. Not only is this site out-of-date, but its huge graphics also take a long time to load onto a surfer's computer and, since the organization does not have its own domain name, the site is hard to find. Its amateurish developer ignored the most basic principles of web-site-design. Of greater concern is the fact that some well-established associations do not have an Internet presence. For example, the British Columbia Association of Health-Care Auxiliaries represents thousands of health care auxiliary members in B.C. This organization could reap the same benefits as CAVR in raising awareness of their association.

How can governments promote investment in web sites to generate the millions of new jobs the Internet offers? As the examples above illustrate, some organizations have made better choices than others. Other organizations have feared to establish an Internet presence. While lots of information is available, small business firms and non-profit organizations often lack the expertise to evaluate how this information impinges on them and how to act on it. Even choosing a web design contractor can be daunting, since the internet industry is so new. Consequently, small business operators need: "meaningful information on e-business planning: the cost of starting up an e-business enterprise, and the types of technical architecture and infrastructure needed for operating an e-business" (Canada, Western Economic Diversification).

Industry Canada has tried to fill the information gap on e-commerce (The Canadian Electronic; Your Internet Business). The Canadian Government also supports non-profit organizations with projects like the Volunteer Opportunities Exchange (VOE). This web site, supported by Human Resources Development Canada, assists volunteers across Canada by giving them a list of suitable positions. Furthermore, a non-profit agency can obtain a list of potential volunteers from this site. Clearly, by providing up-to-date, relevant and accurate information, the government can help both small businesses and non-profits adjust to the Internet's omni-presence.

The fabulous growth of Internet companies is tapering off. In January 2001, dot.com companies in the U.S.A. laid off close to 13,000 employees ("Dot.com Workers"). The losses of established companies have exceeded their revenues (Carpenter), with many dot.coms having over-extended themselves. However, John Doer, "the dean of Internet venture capital, has been saying for years that, if anything, the Internet may be under-hyped" (Cohan 63). The incredible rate of growth in the number of Internet users continues, and many small businesses report considerable success with their new e-commerce web sites (McCullough). Furthermore, many non-profits and membership associations have successfully entered cyberspace. In fact, virtual volunteers, people who do volunteer work via cyberspace, have augmented the traditional face-to-face volunteers (Cravens 2). Clearly, the Internet revolution is just beginning. Small businesses and non-profits can reap the benefits of continued Internet growth provided they can contract with experienced web-designers to build their own web sites.

Works Cited

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